DBM key issue, proclaims futurist

The following column, which appears each issue, looks at new and emerging trends in direct marketing. Alternating columnists are Barbara Canning Brown, a leading figure in the Canadian direct marketing industry, and David Foley, a specialist in database marketing programs.Strategy also...

The following column, which appears each issue, looks at new and emerging trends in direct marketing. Alternating columnists are Barbara Canning Brown, a leading figure in the Canadian direct marketing industry, and David Foley, a specialist in database marketing programs.

Strategy also invites other news items or column submissions for this section. Enquiries should be directed to Mark Smyka, editor, (416) 408-2300.

If you really believe that your business will not need the power of database marketing within the next few years, you should spend time with Donald Libey.

Libey, a u.s.-based futurist, consultant and author, paints a graphic picture of tomorrow’s economy.

‘It took 40 years to get into this mess, and it will take 40 years to get out. This is a total re-structuring of business, in Canada, in the u.s., in Mexico and in the rest of the world,’ he says.

Libey identifies four key factors: externally-generated cost increases, margin erosion, redundancy and technology.

In the u.s., healthcare, taxation and societal costs (such as daycare, welfare and family leave) all represent higher costs that business must pay. These are external costs, imposed on business by government.

(Some would say these changes will make u.s. business familiar with a cost environment that Canadians have known for years.)

At the same time, an educated and recession-scarred consumer is emerging.

‘Price used to be the number three or four concern among consumers,’ Libey says. ‘Now, it’s number one.’

In Canada, supermarkets have club sections, Canadian Tire has ‘new low prices’ and the warehouse-type stores are booming. Higher costs and lower margins make profitability difficult for organizations that resist change.

The consumer of the ’90s is savvy to the purchase options that exist. In stark contrast, business has only a superficial knowledge of its customers.

‘It’s like peeling away at the layers of an onion; the more you know, the closer to the heart of the matter you get. You make better decisions based pure knowledge,’ says Libey.

‘Never before have marketing people had so much information about their customers available to them. Not as reams of computer reports which need analysis, but in decision-ready form,’ he says.

‘In the next five to 10 years, customer databases could eliminate the need for many of today’s mid-level marketing people, because technology will perform the analysis automatically, accurately, and in many cases, instantly,’ he says.

Sophisticated relational databases allow senior managers to make the proper business decisions, based on facts and not based on hype or myth.

‘With higher, externally-imposed costs, reduced margins and technology that is increasingly faster and cheaper, businesses cannot survive without re-aligning their thinking. Get customer knowledge; shed duplicated efforts; rethink the business from the customer’s perspective,’ says Libey.

‘Marketing pods will bring together complementary firms to share resources. Why have separate shipping departments or different marketing databases when one will perform the tasks flawlessly and transparently?’

Libey believes that in Canada, Winnipeg could become a marketing pod, the nation’s major fulfilment, telemarketing and database operations centre.

It’s the logical choice, says Libey, as traffic throughout North America moves east/west, not north/south.

In the u.s., several fulfilment centres have located themselves virtually adjacent to the main Federal Express hub in Memphis, Tenn.

By so doing, they have made their back door adjacent to the Fedex receiving dock.

‘Next day delivery is here, but location strategies like this make same day delivery possible,’ says Libey.

For any industry where supplier choice is predicated on speed, same day nationwide delivery presents a significant competitive advantage. The location makes it cost-effective and practical.

Competitive advantage is at the root of database marketing as well. ‘DBM is really the old 80/20 rule accurately expressed,’ says Libey.

In a business environment where knowledge is key, where redundancy cannot be afforded and where waste truly equals lost profits, database marketing provides any organization with the basis for improved results.

Consider the advances in physical distribution that technology has allowed; consider the real cost savings associated with automated accounting and record-keeping.

Why should the marketing department be excluded from the benefits of technology-assisted decision-making? The answer: it shouldn’t.

Database marketing will become the standard for marketing professionals in the next decade, simply because it makes so much sense.

Database marketing builds revenue (and, potentially, profits), improves customer relationships, slashes costs and provides a factual basis for the growth and development of the business.

‘Smart companies will start to learn about and practice the techniques of database marketing now. It will cost much more to catch up later,’ says Libey.

Don Libey’s recently published book Libey on Customers is available exclusively in Canada at the Marketer’s Bookstore in Toronto. Call (416) 439-4083 for information.

You may contact Mr. Libey directly at (609) 573-9448.

David Foley Associates specializes in design implementation and evaluation of database marketing programs. Please direct comments and questions to David Foley, David Foley Associates, 48 Woodman’s Chart, Unionville, Ont. L3R 6K7, or call or fax (416) 940-8784.